THE FOUR PILLARS

REFLECTIONS about the United States as it enters the 21st century, and the 4 pillars that have undergirded postwar US foreign policy, the 4th of which is a liberal economic order, born of the wartime conference at Bretton Woods that reflects a strong preference for free trade, freely convertible currencies and fixed exchange rates... The ideas on which this rests were put together at the Bretton Woods Conference in 1944. This system of free trade, fixed exchange rates, and freely convertible currencies substantially collapsed in 1971, when the US, faced with a huge loss of gold reserves, refused to convert dollars to gold. The assumption that free trade would continue to benefit the US economy is no longer valid; a huge number of manufacturing jobs have left the country since other countries have begun to compete successfully with the US in exports. Protectionism is on the rise. The assumption that basing the world economy on the dollar would be of indefinite benefit to the US is also being questioned... When the world of Bretton Woods was created, its philosophical father, John Maynard Keynes assumed that all countries would pursue full-employment policies. ...The world needs a new supranational economic order no less--indeed, much more--than it needed one in 1944, at the time of the Bretton Woods agreements. But it needs, of course, a different set of agreements to accommodate the global transformation that has taken place.